Secrets of Portfolio Management Revealed: Expert Guidance From Indian Finance Guru

Secrets of Portfolio Management Revealed: Expert Guidance From Indian Finance Guru

Investments in stocks, mutual funds, bonds or fixed deposits or any other financial vehicle has become common practice nowadays. It's a good way to save on taxes, increase your savings and ensure a golden retirement. Whether you are a cautious investor or a big risk taker, investing your hard earned cash requires careful thought and planning. Do you want to invest in blue chip companies or do you wish to invest in bank certificates of deposits? What are equities? If you are completely clueless about different investment vehicles and getting puzzled making the right choice then you need a financial advisor for effective portfolio management?

A Portfolio in financial terms means a collection of investments either held by an individual or an organization. The concept of portfolio management in investment is very closely linked with diversification. Diversifying means to invest in more than one vehicle, to own different types of assets and this is done to minimize the risk factor. Your portfolio can include different sorts of investment vehicles like stocks, bonds, bank accounts, warrants, gold certificates, mutual funds and so on. The idea is that high risk investments like stocks and bonds which are subject to sudden market fluctuations can be balanced by low risk and relatively safe investments like bank certificates etc. So, if you suffer a loss or set back in the stock market, then presumably a profit in other assets will even out the balance sheet. Portfolio management means controlling, analyzing and making investment decisions. An institution will have their own financial analysis wing to take care of these factors while a private individual may consult a financial advisor for portfolio management services.

Portfolio management is therefore the art of making right investment decisions to gain the biggest possible returns. Before you consult a financial advisor for creation and management of your investment portfolio, you should take a little time out to understand the intricacies of portfolio management. There are basically two types of portfolio management models active and passive.

Active portfolio management involves utilizing financial and technical analytics tools to carry on regular trade to increase your assets. For example, suppose you have stocks of company A and sold them to acquire stocks of company B. a few days later stock B is sold to gain stock C. This type of portfolio management is termed active management. In passive portfolio management, involves acquiring bonds or securities and leaving that alone for a long time to come. For example, you may buy securities like exchange traded funds and hold it for ten years, allowing the stocks to reap benefits which you may enjoy later.

Your financial advisor who is in charge of managing your investment portfolio helps you to choose the right assets to invest in depending upon you long term goals and risk tolerance. Decisions have to be made on which assets to acquire, when and how to acquire as well as when to divest. All these decisions will depend upon how much of a risk you are willing to take and what you want out of your investments. The financial advisor can guide you to the right direction but remember that only you can take the final decision. The most important advice I can give you about investment is never give away complete control of your money to someone else. Rather educate yourself about finance, business world and stock markets so you can make good choices.

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